Neil O'Brien is Director of Policy Exchange, an independent think tank working for better public services, a stronger society and a more dynamic economy. He writes in a personal capacity.

Welfare reform: time for plan B?

Left and right have argued at cross-purposes about the root causes of the riots. The left blame poverty and inequality. The right identify a different cluster of linked causes: welfarism, moral decline, the collapse of the inner city family, and the weakening of authority. One of the few things that left and right can agree on is that worklessness doesn’t help – though even then, they disagree about why that is.

But will anything actually be done about it? In yesterday’s Telegraph Paul Goodman sounded a sceptical note, worrying that politics may prevent the PM from following his better instincts. The front page of today's Spectator asks the same question.

How – realistically – might the government change direction after the riots?

I think a different approach to welfare reform is needed. You could call it a “plan B”, but it isn’t really, because the government should certainly continue to pursue its long-term plans to simplify benefits and make work pay. But those important reforms could take a while – perhaps even until the end of the next parliament to deliver fully. Yesterday’s unemployment numbers show that the government needs to move faster.

The fact that people from outside the UK are managing to find new jobs while UK nationals aren’t suggests that a big part of the problem is about getting people from the UK into jobs, rather than a “lack of jobs” as such.

Fortunately, there is a different approach to welfare reform, which could be introduced more quickly. It restores the idea of balancing rights with responsibilities, and could also help to address some of the wider social problems discussed in the wake of the riots.

Experts call it “conditional welfare”, because it means new conditions on receiving benefits. This approach has proved effective all over the world: in Canada, Australia, Germany and elsewhere. It restores principles that the founders of the welfare state thought were essential, but which have rusted away over the decades.

Diversion: When you first turn up to claim benefits, officials don’t start processing your claim. Instead they show you jobs you could do. In some US states people are asked to show they have looked for work for a couple of weeks before starting to make a claim. This slashes the numbers who start on benefits in the first place.

Work requirements: After a period on welfare, or immediately in some cases, you have to work for your benefits (called “work for the Dole” in Australia). Rather than working for benefits, people tend to quickly leave and find jobs that pay real money instead. This idea is obviously controversial, but a poll for Policy Exchange a few months ago found that nearly 80% of people supported the idea that those who had been on benefits for over a year should have to do community work in return for their benefits. In many other countries people on “workfare” can be seen cleaning the streets, picking litter and cleaning up graffiti. In Britain this approach was piloted in 1996-97. But although the pilots were successful, they were never followed up. Labour’s Flexible New Deal and the current government’s Work Programme do require people who have been out of work for over a year to attend programmes of coaching, training and work placements. But they lack the clarity and deterrent factor of programmes other counties which aim to replicate the normal working week. Traditionally, officials have worried about the cost of such programmes, but their properly targeted use could more than pay for itself.

Segmentation and targeting: At present we treat people the pretty much same no matter what their problems are. This is highly inefficient and unfair. Jobcentres don’t identify people’s problems, and don’t ask obvious questions at the start of a claim like: are you a drug addict or drinker? Jobcentres basically still wait to see who finds a job and who doesn’t. But those who are going to find work anyway should be left alone, while those who will struggle to find a job should have their underlying problems dealt with more quickly, rather than being left to fester, getting more and more difficult to employ over time.

Balancing rights and contributions: Britain is very unusual compared to most other countries in that how much you pay in makes almost no difference to what you get out of the benefits system – or how you are dealt with. We need to make National Insurance count for something again. For example, everyone on Jobseekers Allowance has the right to turn down any job they don’t want for the first three months of their claim. This is appropriate for those who have paid in, but not for those who haven’t. School leavers in particular should not have this right. They must be discouraged from starting to claim benefits.

Sanctions and behaviour modification. Much of the long term welfare problem and related criminality is really about drugs and dependency. The DWP estimated a few years ago that there are about 300,000 severe drug users on benefits. Many more will be alcoholics. We could learn some big lessons from the “Hope” project in Hawaii. Drug addicted offenders in the community were tested every day. Failure to comply meant an immediate prison sentence. The sentence they received was actually shorter than the traditional length, but it was always and immediately applied, not on the 6th such breach. It improved compliance and cut relapsing so radically that it saved money and free up prison spaces. As any parent knows, responsibility is taught through clear boundaries, enforced predictably, persistently, and authoritatively. Our current criminal justice system – with its poorly-enforced community sentences and drug-filled prisons – rarely displays these qualities.
Sanctions for breaking benefit rules more generally should be similar: it isn’t about the size of the fines, but how consistently and firmly they are deployed. Polling shows that the public would support much larger sanctions. Half (49%) of voters backed the idea that claimants who are sanctioned for not complying with their jobseekers agreement should lose half or more of their benefits. 21% backed the idea that they should lose all their benefits “regardless of the hardship it would cause”. At present first offence sanctions are much smaller than this.

However, it is hard to take benefits from those with kids. Perhaps we could learn from Australia where the sanction for problem drinkers is that benefits are no longer paid as cash – but on a card which can only be used for food and necessities. This is sometimes described as “quarantining” benefits.

Absent fathers on benefits: Before the riots the Prime Minister hit out at absent fathers. But there is still a major problem about absent fathers who are on benefits. There are roughly 300,000 of them, and at present they pay a deduction from their benefits of just £5 per week, no matter how many children are involved. This is hardly fulfilling their responsibilities. As the sociologist Peter Saunders has pointed out, it is “less than a pack of cigarettes” and unlikely to encourage them to take responsibility. Instead of tiny fines, perhaps they should face stronger work requirements of the kind described above. Only by getting these men into work will they be able to earn the money to support their children.

How effective are these policies?

In the US as a whole, the welfare caseload declined by 42% between 1993 and 1998. In the state which went furthest in implementing the conditional welfare model, Wisconsin, the caseload dropped by a staggering 87%

In Australia, the welfare rolls were cut by between 5 and 10 percent once claimants were asked to attend initial interviews (of a lengthier type than the ones faced by UK Jobseekers Allowance recipients), and around a third once they were asked to attend compulsory work programmes.

After Canada made their system more conditional, From March 1995 to March 2005, the number of welfare beneficiaries (including children) across Canada decreased from just over 3 million to 1.7 million.

Germany's version of the reforms – passed during the last decade – were more limited and more gradual. But the four "Hartz" packages did contain elements of activation and conditionality, and put new rights and duties on the unemployed. Official evaluations of the reforms revealed that the districts with stricter sanctioning policies achieved higher exit rates for benefit recipients. Altogether, unemployment fell significantly (by more than 1 million people), although it is difficult to attribute this directly to the reforms.

Can welfare reform help solve other social problems?

Worklessness is a bad thing in itself. But it also contributes to other social problems, which in turn lead to worklessness, producing a vicious cycle. Conditional welfare could help to solve some of the social problems that have been identified as contributing to the culture that kindled last week’s riots.

Firstly, reducing worklessness is probably the most important contribution that government policy can make to family stability. Children from broken homes are nine times more likely to grow up to be young offenders. But what can government actually do to improve family stability, particularly among poorer groups? Even their advocates suggest that marriage tax allowances are unlikely to radically change behaviour on their own. Employment is the one factor that government has strong control over, which also has a major effect on family formation and stability. Controlling for everything else, worklessness is one of the most potent determinants of whether people marry or become lone parents.

Secondly, it is about restoring authority. The British state tends to be rather feeble. The rioters would mostly have experienced this through their previous encounters with it: their contacts with jobcentres, social workers, schools, the police, courts, prisons will all have reinforced the impression of official weakness. Conditionality intellectually fits together with “broken windows” policing reforms like those pioneered by Bill Bratton, which aim to also bolster civilised norms and control behaviour.

It is also about changing the culture. Politicians often talk about wanting to “change the culture”, but very few succeed. Unconditional welfare certainly does change the culture. But because social housing and the benefit system have not rewarded people for behaving responsibly or punished them for being irresponsible, over the decades, our culture has been changed. I believe that conditional welfare can help to change it back.